Aussie Technologists Plan To Open The World's First Bitcoin-Based Bank This Year

Sydney technology firm Hotwire PE is months away from opening the world’s first Bitcoin-based bank after a year of talks with regulators in the UK, US, Australia and Singapore.

CEO Craig Steven Wright said Denariuz Bank would begin accepting deposits in the second half of 2014 and would eventually offer Bitcoin-based equivalents of conventional savings accounts, term deposits, credit and debit cards, and loans.

One Bitcoin currently buys about $US667 or $A736. Wright said Denariuz would launch with a global pool of more than 100,000 Bitcoin ($A73.6 million) from its backers.

Eventually, the bank hopes to have a million customers globally.

Denariuz will have no physical branches, nor does Wright expect customers to rely on Bitcoin ATMs.

Instead, the company has built an online “eWallet” that, like today’s online banking applications, will let customers access their accounts on their desktop and mobile devices.

Wright, who has worked in information security for 15 years and is a lecturer at the Charles Sturt University, also hopes to strike an agreement with a payments card provider like Visa, American Express or Cuscal to facilitate day-to-day Bitcoin transactions.

Wrestling with regulators and politics

Hotwire PE has about 50 staff in Australia and the US, of which about 45 are based down under.

Wright said regulatory discussions had been particularly difficult in Australia, where the ATO has yet to clarify how it will handle Bitcoin-related GST.

But he was committed to opening Denariuz Bank in Australia because “I’m Australian and I’m still here”.

Wright hopes to finalise talks with the tax office in the coming weeks, and with company and banking regulators ASIC and APRA within the year.

The latter has yet to decide on whether Denariuz is eligible for a full banking licence, without which it will “be hanging off a third-party Australian Financial Services Licence” (AFSL), Wright explained.